INTERNATIONAL BUSINESS ENTRY MODES
EXPORTING FRANCHISING JOINT VENTURES
AND FOREIGN DIRECT INVESTMENT ANALYSIS
NOTES
◉ What business opportunities are presented by globalization?
Answer: production/distribution of goods/services crosses country
borders, allows companies to find new, specialized talent that is not
available in their current market
◉ Describe economic globalization and its effects Answer:
globalization refers to the widespread, international movement of
goods, capital, services, technology, and information. It is increasing
economic integration and interdependence of national, regional, and
local economies across the world through an intensification of the
cross-border movement of goods, services, and technologies, and
capital
◉ Describe political globalization and its effects Answer: reduce the
importance of nation states, some countries don't like political
integration might create isolation policy
◉ Describe cultural globalization and its effects Answer:
globalization refers to the transmission of ideas, meanings, and
,values around the world in such a way that extends and intensifies
social relations
◉ What are the arguments for globalization from a country's
perspective? Answer: widespread sharing of ideas
- sharing exposes people to more cultures and ideas, making them
more tolerant
◉ What are the arguments against globalization from a country's
perspective? Answer: worry that cultures are becoming
homogenized, especially in the spread of culture throughout the
world
◉ Describe the first stage of entering a global market (market entry)
Answer: enter new country using business models from their home
country
◉ Describe the second stage of entering a global market (product
specialization) Answer: transfer full production process of a product
to a single, low-cost location
◉ Describe the third stage of entering a global market (value chain
disaggregation) Answer: complete each activity in the most
advantageous location- determine best location to manufacture
product
,◉ Describe the fourth stage of entering a global market (value chain
reengineering) Answer: companies seek further cost savings,
substituting lower cost labor for capital
◉ Describe the fifth stage of entering a global market (creation of
new markets) Answer: market expansion, lower prices in old and
new markets
◉ Explain convergence of needs Answer: reduction in the difference
of consumer product selection within a specified population
◉ Explain Market (driver of globalization) Answer: needs and wants
of the market, opportunity for scale
◉ Explain cost (driver of globalization) Answer: companies are
always considering reducing their production cost, economies of
scale and scope
◉ Explain competition (driver of globalization) Answer: favorable
policies, support for industry
◉ Explain government (driver of globalization)
, - include favorable policies and support for industries Answer: new
markets, increased level of trade
◉ Describe the world is flat view Answer: the playing field between
countries is becoming more level, and people, products, and ideas
are more connected
◉ Explain "C" is for culture Answer: generally cultural differences
between two countries reduce their economic exchange
◉ Explain "A" is for administration Answer: bilateral trade flows
show that administratively similar countries trade much more with
each other than dissimilar countries
◉ Explain "G" is for geography Answer: generally as the distance
goes up, trade goes down, since distance usually increases the cost
of transportation
◉ Explain "E" is for economic distance Answer: distance refers to
differences in demographic and socioeconomic conditions
◉ What are the benefits of global expansion from MNC's
perspective? Answer: unsaturated demand for new product, lower
labor costs, less expensive natural resources and inputs to products
EXPORTING FRANCHISING JOINT VENTURES
AND FOREIGN DIRECT INVESTMENT ANALYSIS
NOTES
◉ What business opportunities are presented by globalization?
Answer: production/distribution of goods/services crosses country
borders, allows companies to find new, specialized talent that is not
available in their current market
◉ Describe economic globalization and its effects Answer:
globalization refers to the widespread, international movement of
goods, capital, services, technology, and information. It is increasing
economic integration and interdependence of national, regional, and
local economies across the world through an intensification of the
cross-border movement of goods, services, and technologies, and
capital
◉ Describe political globalization and its effects Answer: reduce the
importance of nation states, some countries don't like political
integration might create isolation policy
◉ Describe cultural globalization and its effects Answer:
globalization refers to the transmission of ideas, meanings, and
,values around the world in such a way that extends and intensifies
social relations
◉ What are the arguments for globalization from a country's
perspective? Answer: widespread sharing of ideas
- sharing exposes people to more cultures and ideas, making them
more tolerant
◉ What are the arguments against globalization from a country's
perspective? Answer: worry that cultures are becoming
homogenized, especially in the spread of culture throughout the
world
◉ Describe the first stage of entering a global market (market entry)
Answer: enter new country using business models from their home
country
◉ Describe the second stage of entering a global market (product
specialization) Answer: transfer full production process of a product
to a single, low-cost location
◉ Describe the third stage of entering a global market (value chain
disaggregation) Answer: complete each activity in the most
advantageous location- determine best location to manufacture
product
,◉ Describe the fourth stage of entering a global market (value chain
reengineering) Answer: companies seek further cost savings,
substituting lower cost labor for capital
◉ Describe the fifth stage of entering a global market (creation of
new markets) Answer: market expansion, lower prices in old and
new markets
◉ Explain convergence of needs Answer: reduction in the difference
of consumer product selection within a specified population
◉ Explain Market (driver of globalization) Answer: needs and wants
of the market, opportunity for scale
◉ Explain cost (driver of globalization) Answer: companies are
always considering reducing their production cost, economies of
scale and scope
◉ Explain competition (driver of globalization) Answer: favorable
policies, support for industry
◉ Explain government (driver of globalization)
, - include favorable policies and support for industries Answer: new
markets, increased level of trade
◉ Describe the world is flat view Answer: the playing field between
countries is becoming more level, and people, products, and ideas
are more connected
◉ Explain "C" is for culture Answer: generally cultural differences
between two countries reduce their economic exchange
◉ Explain "A" is for administration Answer: bilateral trade flows
show that administratively similar countries trade much more with
each other than dissimilar countries
◉ Explain "G" is for geography Answer: generally as the distance
goes up, trade goes down, since distance usually increases the cost
of transportation
◉ Explain "E" is for economic distance Answer: distance refers to
differences in demographic and socioeconomic conditions
◉ What are the benefits of global expansion from MNC's
perspective? Answer: unsaturated demand for new product, lower
labor costs, less expensive natural resources and inputs to products
